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Economics
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study of how people make choices under conditions of scarcity
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Scarcity Principle (No-Free Lunch Principle)
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Boundless needs and wants;resources are limited
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Cost-Benefit
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individual should take action if the extras benefit from taking action are least as great as the extra cost
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Rational Person
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Someone with a well-defined goals who tries to fofill those goals as best as possible
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Economics Surplus
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Benefit of taking an action minus cost
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Opportunity Cost
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Cost that is beyond recovery at the moment as decision must be made
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Marginal Cost
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increast in total cost that results from carrying out one additional unit of activities
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Marginal Benefit
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increase in total benefit that results from carrying out one additional unit of activity
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Average Cost
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Total benefit of undertaking an unit of n activity divided by n
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Average Benefit
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the total benefit of undertaking n units of an activity divided by n
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Normative Economic Principle
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one that says how people should behave
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Postive Economic Principle
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one that predicts how people will behave
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Microeconomics
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Study of individual choice under sacrcity and its implication for the behavior of prices and quantities in individual markets
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Macroeconomics
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Study of performance of national economics and the policies that governments use to try to improve that performance
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Absolute Advanatge
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produce a good at lowest price using least amount of resources.
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Comparative Advanatage
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Opportunity cost of performing a task is lower than another person's opportunity cost
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Production Possibilities Curve
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A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good
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Attainable Point
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any combination of goods that can be produced using currently available resources
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Unattainable Point
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any combination of goods that cannot be produced using currently available resources
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Inefficient Point
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any combination of goods for which currently available resources enable an increase in the production of one good without a reduction in the production of the other
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Efficient Point
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any combination of goods for which currently available resources do not allow an increase in the production of one good without a reduction in the production of the other
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Outsourcing
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A term increasingly used to connote having services performed by low-wage workers overseas
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